Posts filed under ‘Consumer Segments’

The Curious case of Superdry- Britain’s youngest fashion super brand

superdry pic 1

What does it take to be a super brand in the world of high street fashion? If selling in over a hundred countries, clocking an annual turnover of approximately £400 million with pre-tax profits of over £ 50 million and being worn by A-list celebrities like David Beckham, Leonardo Di Caprio, Kate Winslet, Zac Efron and even Pippa Middleton is all it takes, then it is imperative we call Superdry, the British fashion label founded in 2004 a super brand. In today’s post, we profile Superdry, the British brand described famously as “vintage Americana meets Japanese graphics meets British fits” and track its rise to being one of the world’s youngest and trendiest fashion super brands.

Origin: The story behind the origin of Superdry is a very fascinating one as it explains to a large extent the design philosophy behind their brightly colored clothes and accessories. Many people who look at Superdry’s range automatically assume that the brand is of Japanese origin. The Japanese script visible on almost all their designs and even on the logo may be the reason for this confusion, but the brand’s tagline, “British Design. Spirit of Japan.” is the shining light here as it clearly points out that the brand is embellished with only the “spirit” of Japan. In fact, most of the Japanese characters and words used are used inaccurately and seem to be translated with the help of a dictionary rather than by someone who actually speaks Japanese.

The real story behind the label is that it was conceived in 2003 by designer James Holder (founder of skatewear brand Bench) and Julian Dunkerton (founder of university fashion brand CULT clothing) on an inspirational trip to Japan, where they merged Julian’s fascination for vintage Americana with James’ love for Japanese style graphics and tailored fits. The first design they came up with was the vintage OSAKA 6 T-shirt which is still in production 10 years later and has been their most iconic product till date. They then founded Superdry as a label with Theo Karpathios in 2004 (who headed the international and wholesale division until 2012 when he decided to quit).

superdry pic 2

The Rise:  Superdry started out humbly as a brand retailing mostly through multi brand outlets and through CULT stores in university towns everywhere. The brand was slowly gaining popularity amongst students and urban hipsters until the moment came that changed Superdry’s fortune- David Beckham wore it in his annual calendar. David, who was at the pinnacle of his footballing career then, was one of the most influential fashion celebrities at the time and he wore the fledgling label in three different pictures from the same calendar.

superdry pic 3

This endorsement was soon followed up by celebrity sightings everywhere. In Malcolm Gladwell’s words, the tipping point was reached and Superdry started trending. University students everywhere were wearing Superdry and talking about it on campuses. Superdry took themselves way more seriously as well, creating stores which won several design awards for recreating the grungy, greasy, earthen chic mood that so well represents the brand.

superdry pic 4

Superdry’s marketing also pushed the brand into college towns by offering special discounts to college students and hosting exclusive student nights with live DJ’s and goodie packs for student shoppers. Their marketing concentrated on tie-ups and support for young and upcoming music artists and a very interesting design collaboration with Morgan, the British vintage car company to produce a limited range of “Superdry Morgans”- A classic Morgan three wheeler with Japanese style graphics and design in the Superdry way. These innovative marketing methods coupled with an effective social media and PR campaign led to an unmistakable buzz surrounding the brand and demand grew exponentially.

superdry pic 5

As demand grew, Superdry expanded quickly, both within the UK and internationally until bravely, they decided to file an IPO in 2010 after only 5 years in existence with 55 stores in the UK and 53 more internationally.

To their own surprise, the IPO was well received and their stock was trading at £ 18 per share within a year of being offered for 500 pence per share. This accelerated Superdry’s growth story and by 2012, Superdry was available in more than 400 exclusive stores worldwide. In fact, store of Julian Dunkerton’s CULT brand have also become Superdry stores.

 The Customer: Superdry’s evolution into a global fashion super brand within 10 years of launch points to the arrival of a new kind of customer: One willing to experiment with abstract concepts and brave ideas and also willing to pay a premium for it. These are customers who have been described by experts as the “New Luxury Millenials” and they are instrumental in Superdry’s growth story, as also other new age brands like ASOS and Zara.

superdry pic 6

NLMs are described by retail consultants Sheridan & Co. as people born between 1980 and 1999 who spend a large portion of their disposable income buying brands and luxury products. These individuals have been shielded from the global recession to a large extent by the wealth of their parents and are expected to drive growth in the luxury segment at least until the next major financial crisis. Superdry has tapped these trend sensitive customers from the outset and keeps them coming back for limited editions it releases regularly in collaboration with designers like Timothy Everest and luxury shoemaker “Joseph Cheaney & Sons.”

These NLMs are the customers driving market trends today and the brands of the future must take a cue from Superdry’s experience in tapping this segment.

  • Rahul Sharma
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February 18, 2014 at 8:55 am 1 comment

Consumption and the Super Rich

In our last post, we established the context for our exploration into the lives of the super-rich. We saw just how wealthy the 1% at the top is in comparison to the rest of the world’s population. In this post, we shall try and decode their consumption habits and gain deeper insight into the mind of the luxury shopper.

A survey conducted by Prince and Associates in association with Elite Traveller Magazine, which is popular among private jet travellers uncovered these spending habits of the Jet setting elite:

  • 89% purchase fine jewelry per year, spending an average of $248,000 (INR 1.24 Cr.)
  • 32% purchase luxury watches per year, spending an average of $147,000 (INR 73.5 Lakh)
  • 90% purchase fashion/accessories per year, spending an average of $117,000 (INR 58.5 Lakh)
  • 65% stay in a hotel/resort for leisure per year, spending an average of $157,000 (INR 78.5 Lakh)
  • 73% use a hotel/resort for a meeting or event per year, spending an average of $224,000 (INR 1.12 Cr.)
  • 59% stay at a spa per year, spending an average of $107,000 (INR 53.5 Lakh)
  • 21% take a cruise per year, spending an average of $138,000 (INR 69 Lakh)
  • 17% take an experiential trip per year, spending an average of $98,000 (INR 49 Lakh)
  • 75% make home improvements per year, spending an average of $542,000 (INR 2.71 Cr.)
  • 85% purchase wine or spirits per year, spending an average of $29,000 (INR 14.5 Lakh)
  • 30% purchase fine art per year, spending an average of $1,746,000 (INR 8.73 Cr.)
  • They own/lease 4.4 luxury vehicles currently and 85% are planning to acquire a new vehicle in the next 24 months
  • They own 2.5 primary homes valued at $2 million + (> INR 10 Cr.)

Thus, these people spend considerable amounts of money on things others might consider luxurious. If you thought only the Americans and Europeans were crazy about luxury, the super-rich in Asia are also quickly getting up to speed with the west. Japan has long been one of the biggest markets for luxury goods in the world, and India and China are fast catching up thanks largely to growing economies and young populations with large expendable incomes.

However, it’s not just the amount of money they spend, but the manner in which they spend it that suggests the lengths this segment is willing to go to in order to satisfy their desire to consume.

Consider, for example these shopping behaviors exhibited by some of India’s super rich and reported by the Economic Times :

  • Shahnaz Husain, Cosmetics Diva, has a Louis Vuitton collection in her wardrobe—not crafted at any factory of the French fashion giant, but at her bungalow in South Delhi, designed by herself and stitched by an in-house tailor. She always buys LV Bags in pairs: One to be used as a bag and one to be cut up and shredded for use by her tailor.
  • Diljeet Titus, one of Delhi’s top lawyers, has bought 40 handsets of luxury phone brand Vertu in the last couple of years. Vertu phones in India cost between INR 3 lakh and INR 66 lakh. Titus also loves to splurge on luxury watches, suits, phones and vintage cars for himself.
  • A lady in Delhi sent 3 specially imported Hermes Birkins worth INR 60 Lakhs to a family friend whose daughter’s wedding she was unable to attend. She also sent an apology note.

This is not just a Delhi phenomenon, although Delhi is fast establishing itself as the nation’s luxury capital. The Delhi stores of most luxury brands with a presence in India are their best performing stores in the country today and cities like Bombay and Bangalore are only just catching up. As far as luxury malls are concerned, Delhi’s Emporio, Mumbai’s Palladium and Bangalore’s UB City are the most preferred destinations for luxury brands seeking to open in the country.

mall interiors

Data gathered from one of the world’s top apparel brands with operations across India suggests that approximately 55% of all revenues come from a small portion of the total customer base (~10%) and spending is concentrated even further amongst the top 1%.

Interesting anecdotes from those in the industry bear this out. One customer, for example, a rich businessman from the Mumbai area spends approximately 2 million INR annually at just 1 store of a brand selling premium casual wear, in addition to shopping at the brand’s stores in Thailand, London and at other locations across Europe. Another customer in a different city once deposited approximately 1 million INR at a certain luxury brand’s store in cash! He said it was too inconvenient for him to carry cash around every time he had to buy something. Even more surprising, he used up his store credit within 90 days.

A 2008 research amongst affluent households (Household Income >$100K) and Super-Rich Households (>$250 K) also provides keen insight on the media consumption habits of the Super Rich, as compared to the affluent. The richer one gets, the more time one tends to spend reading and surfing the web, versus time spent watching TV and listening to radio.

Thus, the super-rich individual today is:

  • A big spender on luxury products and experiences
  • An eccentric and a stickler for personalization, both in experience and in product
  • A global traveller, in tune with the latest luxury trends around the globe
  • An avid reader and a digital native

The Super Rich Customer’s wallet is the Holy Grail most luxury marketers are after and the quest isn’t an easy one. “What do you sell to someone who has it all?” is the question most are trying to answer. In the next post, we shall take a look at what Luxury and Premium Brands the world over are doing to serve this ‘Over served’ segment.

  •   Rahul Sharma

December 24, 2013 at 5:27 am 3 comments

The 1%: Decoding the Super rich

They go by many names; The Plutocrats, The 1% or simply, The Super Rich; but estimates regarding their riches and buying power have remained in the realm of conjecture. Until now, that is.

In the interest of those as curious as us about the lives and times of the super rich, we are doing an exclusive three post feature on the swish set. In this post, we shall try and estimate the magnitude of their wealth and influence. In the next two, we shall try and analyze their consumption habits and also figure out what marketers the world over are doing to cater to this segment and what are the opportunities that exist.

The Global Wealth Report published by Credit Suisse estimates that approximately 3.2 million people (0.7% of the world’s population) control 41% of its wealth. Contrast this with the 3.2 billion who live on only 3% of its wealth and the inequities at play become apparent. In Russia, for instance, 110 people control 35% of the nation’s wealth!

Global Wealth Pyramid

The Occupy Wall Street Movement has been credited with bringing this issue to the masses with their revolutionary slogan, “We are the 99%”. In recent times, there have been major protests in the west regarding the magnitude of compensation received by the CEOs of banks and other major financial institutions. Governments have been trying to resolve these issues by increasing taxes and introducing such concepts as Wealth Tax and Property Tax to re-distribute income but the Super rich are only getting richer, and smarter.

Wealth-X, a research and consulting firm dedicated to the super-rich defines the UHNWI (Ultra High Net-worth Individuals) as anyone with a net household income more than $30 million, excluding the value of the individual’s current place of residence. According to the World Ultra Wealth Report published by Wealth-X in association with UBS, the net worth of the UHNWI  is estimated at a whopping $28 trillion. This values the combined wealth of these 200,000 people at more than the combined GDPs of the US ($15 trillion) and China ($7 trillion). Thus, 0.04% of the world’s population controls approximately 12% of its wealth!

India is home to 7850 of these UHNWIs, worth approximately $935 billion (~60% of GDP) and has registered the highest increase in the number of dollar millionaires over in the last year among the BRICS. It is also home to the largest number of female millionaires in the world (1250) worth approximately $95 billion. A city-wise analysis shows that more than 90% of India’s UHNW population lives in top 10 cities including Mumbai, Delhi, Bangalore, Kolkata, Hyderabad, Chennai, Ahmedabad, Pune, Gurgaon and Jaipur. Mumbai and Delhi, however, dominate with more than 50% of the country’s UHNW population based in one of these two cities.

We will talk about the spending power and consumption habits of these super-rich individuals in our next post.

  • Rahul Sharma

December 17, 2013 at 6:35 am Leave a comment


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